The Numbers Behind the Slowdown

The deceleration in Salesforce’s growth is undeniable. From a peak growth rate of 29% in FY2021 Q2, the company has seen a steady decline, reaching a mere 8% in the latest quarter. Sangram Vajre, CEO of GTM Partners and former Salesforce executive, acknowledged the slowdown but offered a broader perspective: “Past double-digit growth is a dream for most SaaS companies, and Salesforce has birthed almost all modern-day SaaS businesses. So let’s be kind.” Vajre’s point is clear: while Salesforce’s growth is slowing, it remains a significant player in the SaaS market, and a shift in growth trajectory might be inevitable for a company of its magnitude.

However, Vajre also hints at a potential issue if the CRM category itself is growing faster than Salesforce: “If the CRM as a category is growing 10x and other companies in that category are growing at a faster rate than Salesforce, then there is a real problem.” This sentiment echoes a broader concern among industry analysts: Is Salesforce losing its competitive edge?

The Impact of Reduced Marketing and Sales Investment

A closer look at Salesforce’s financials reveals another critical factor contributing to the slowdown: a reduction in marketing and sales expenses. Gaurav Bhatia, Chief Marketing & Digital Officer, points out that Salesforce has significantly cut its spending in this area, from 45% of total revenue in 2021 to 37% in 2025. This reduction is stark, especially compared to peers who typically spend around 10% of their revenue on marketing and sales. “Salesforce’s growth has a direct correlation with its investment in marketing and sales,” Bhatia asserts. The implication is that the company’s decision to tighten its belt in these areas might be coming at the cost of its growth rate.

Strategic Shifts and the Road to Profitability

Despite the slowdown, Salesforce has made strategic decisions aimed at improving its margins. The company has shifted its focus from aggressive growth to margin improvement, a strategy that has included significant cost-cutting measures. In January, Salesforce announced it was cutting 10% of its workforce, a move aimed at streamlining operations and boosting profitability. These efforts have borne fruit, with the company achieving a 30% adjusted operating margin three quarters earlier than expected, as noted by Amy Weaver, Salesforce’s CFO.

However, this shift in strategy has also led to concerns about underinvestment in critical areas such as sales and marketing, potentially contributing to the slowdown in revenue growth. Scott Vaughan, a GTM Strategy and Revenue Accelerator, highlighted Salesforce’s recent history of acquiring high-growth companies like Tableau and Slack but criticized its current strategy: “As a shareholder and analyst, they lost their way. But it doesn’t mean they can’t reinvent by getting back to innovation and customer focus, not just selling software.”

Competition and Market Position

Salesforce’s challenges are compounded by increasing competition in the CRM and cloud computing markets. Tech giants like Microsoft, Oracle, and SAP have all ramped up their efforts, posing a significant threat to Salesforce’s market dominance. This competition is particularly intense in the AI space, where Salesforce has struggled to keep pace with leaders like Microsoft and Google.

Menny M., a Salesforce developer and technical architect, points out that Salesforce’s once-unassailable position is now under scrutiny: “Salesforce has been a CRM powerhouse for years, but is the shine starting to fade?” He highlights several issues, including the increasing complexity of Salesforce’s platform and the perception that the company is lagging behind in AI innovations. “While others like Microsoft and Google soar with AI, Salesforce is still catching up,” he adds.

This sentiment is echoed by Itai Shmida, a Salesforce Architect, who believes that Salesforce’s pricing and complexity are becoming deterrents for mid-sized businesses: “Salesforce prices are too high, especially for mid-sized businesses. Add to that bigger complexity, which translates to higher spend on professionals.”

The Return of the Old Guard

In response to these challenges, Salesforce has turned to its roots, bringing back several former executives, or “boomerangs,” to help steer the company through these turbulent times. Ariel Kelman, who recently returned as Chief Marketing Officer after a decade away, sees this as a pivotal moment for the company: “This is a company that I had a great time at,” Kelman said at Salesforce’s Dreamforce conference. The return of these seasoned leaders is part of Salesforce’s broader strategy to refocus on its core strengths and drive innovation.

Miguel Milano, another returning executive, has taken on the role of Chief Revenue Officer. His return is part of a broader effort to revamp Salesforce’s sales strategy and reconnect with the company’s original mission. “It took a couple swipes,” said Brian Millham, Salesforce’s Chief Operating Officer, who convinced Milano to rejoin the company. Millham, who has been with Salesforce for 24 years, sees this as a critical time to leverage the experience of these returning leaders: “When you grow up here, you have a certain commitment to the company.”

The Outlook for Salesforce

So, should investors panic? The answer is complex. Salesforce is undoubtedly facing significant challenges, from slowing growth to increased competition and internal restructuring. However, the company is also making strategic moves to adapt to these challenges, focusing on profitability, innovation, and leveraging its scale.

Janet Gehrmann, co-founder of Scoop Analytics, remains optimistic about Salesforce’s future: “Salesforce has economies of scale that make it too soon to write off—they can do many interesting things with AI other companies can’t yet dream of due to their scale.” The key, according to Gehrmann, lies in the company’s ability to execute its strategy effectively and continue to innovate in a rapidly changing market.

In the end, while Salesforce’s slowing growth may be a cause for concern, it is also a reflection of the company’s maturation and the broader challenges facing the tech industry. As long as Salesforce can maintain its profitability and continue to adapt to market conditions, it remains a formidable player in the CRM space. Investors may need to adjust their expectations, but there is no need to panic—at least not yet.

Nutshell Enterprise’s heart lies in advanced features, including a change log audit log and read-only SQL access. These tools empower businesses to gain deeper insights into their CRM data and track their teams’ actions, fostering transparency and accountability.

“In a nutshell, the Nutshell Enterprise plan is tailored to meet the evolving needs of modern businesses,” said a spokesperson for Nutshell. “We understand the importance of robust data management and seamless integration with existing systems. With Nutshell Enterprise, we aim to provide our customers with the tools and support they need to thrive in today’s competitive landscape.”

Key features of Nutshell Enterprise include premier support services, such as free ongoing data import assistance and API support for all integrated applications. These services ensure that businesses can seamlessly import their data into Nutshell and integrate it with other essential tools and platforms.

Furthermore, Nutshell Enterprise offers single sign-on user group provisioning and other SCM provisioning capabilities, streamlining user access and permissions management. The plan also includes free scheduled phone support, allowing customers to receive prompt assistance.

“One of the highlights of Nutshell Enterprise is the dedicated success strategist assigned to each customer,” explained the spokesperson. “This experienced professional works closely with the customer to onboard their team and optimize their use of Nutshell, ensuring maximum value and efficiency.”

In addition to these premium support services, Nutshell Enterprise provides access to CRM add-ons, such as Nutshell Campaigns and People IQ. Nutshell Campaigns enables businesses to send up to 150 emails per month for free, empowering them to leverage email marketing as a powerful tool for customer engagement. Meanwhile, People IQ and Visitor IQ allow businesses to unlock valuable contact information for their customers and website visitors, facilitating targeted communication and lead generation.

“With Nutshell Enterprise, businesses can harness the full potential of their CRM system and unlock new growth opportunities,” said the spokesperson. “Our goal is to provide unparalleled support and resources to our customers, empowering them to succeed in today’s dynamic business environment.”

Contact our sales team today to learn more about Nutshell Enterprise and how it can benefit your business. With Nutshell Enterprise, the possibilities are limitless, and the future of CRM is within reach.

Teixeira, a visionary leader with a keen understanding of the industry’s evolving landscape, illuminates Shiji Group’s global footprint. The company boasts a workforce of 1,200 employees across strategic locations worldwide. From bustling metropolises to idyllic retreats, Shiji Group’s mission is clear: to deliver innovative software solutions that transcend geographical boundaries and elevate guest experiences to unprecedented levels of sophistication and customization.

Central to Shiji Group’s ethos is an unwavering commitment to excellence in service delivery. Teixeira articulates this sentiment succinctly, emphasizing, “In serving demanding clientele, we demand nothing less than perfection from ourselves and our partners.” This ethos permeates every facet of the organization, driving a relentless pursuit of customer satisfaction and loyalty.

At the heart of Shiji Group’s operational strategy lies a deep appreciation for the symbiotic relationship between technology and customer engagement. Teixeira elaborates, “Technology must seamlessly integrate into the guest experience, offering reliability and anticipation of their needs.” This philosophy underscores Shiji Group’s dedication to leveraging cutting-edge solutions to exceed guest expectations and enhance operational efficiency.

In an era defined by data-driven decision-making, Teixeira underscores the transformative power of analytics in unlocking actionable insights into customer behavior and preferences. “Data serves as the lifeblood of our organization,” Teixeira remarks, highlighting its pivotal role in driving informed business decisions, optimizing processes, and tailoring services to meet the evolving needs of discerning clientele.

Offering sage advice for businesses navigating the complexities of the digital age, Teixeira emphasizes the importance of simplicity and human-centric design. “User-friendly solutions and intuitive interfaces are paramount,” Teixeira asserts, urging businesses to prioritize the guest experience and forge deeper, more meaningful connections with their clientele.

In conclusion, Teixeira’s insights offer a compelling narrative on the intersection of technology, data, and hospitality. As Shiji Group continues to chart new frontiers of innovation, Teixeira encapsulates the sentiment that “the future belongs to those who embrace technology, data, and an unwavering commitment to customer satisfaction.” Shiji Group stands at the vanguard in an industry poised for transformation, redefining the essence of hospitality for a new era.

Although it got its start in the customer relationship management sector, Salesforce is a growing power in the cloud and AI markets, as evidenced by its hires over the course of 2023.

Spotted by CRN, Salesforce’s most recent hires include some top talent from the company’s biggest rivals. The list includes some executives who previously worked for Salesforce but moved on to other opportunities and are now returning. Miguel Milano, Ariel Kelman, Fernando Bermejo, and Kendall Collins are in that group. Others, such as Manish Menon, Param Kahlon, Erin Traudt, and Josh Glynn, are joining the company for the first time.

What is most telling, however, is where the executives have previously worked. The majority of the executives have past experience at AWS, Google, Microsoft, or Oracle.

Salesforce has been one of the most bullish companies on the digital transformation and the role cloud computing, remote work, and AI will play in that transformation. The company acquired Slack, has rolled out its AI Cloud for enterprise customers, and has been a vocal proponent of a work-from-anywhere model.

The company’s hires in 2023 give an insight into where the company is going, with the cloud front and center for the company’s future.

Rob Locascio, CEO of LivePerson, predicts that the AI-driven conversational space will ultimately have as much impact and be as big an industry as ecommerce, search, or social. Locascio was interviewed by Jim Cramer on CNBC:

Ecommerce, Search, Social… and Conversational Space?

When I look at the conversational space I think it’s going to have as much impact as ecommerce or search or social. The ability to talk to a machine and have a natural conversation, it’s in the collective consciousness of people. We all believe the Alexa type situation should happen with every company. 

We do that with Delta and T-Mobile and all these big brands. What we’re looking at now is how do we take that to the world? LiveIntent is proprietary technology to look at the intent that a consumer is having with the brand. In terms of I want to buy something, we have a way to analyze that and then use machine learning algorithms to then scale those conversations. That’s what this is about. 

Healthcare Companies Defending Themselves From Amazon Via AI

In Q4 we signed a couple healthcare companies. They want to talk about defending themselves from Amazon because Amazon said they want to go into healthcare. The way they think they can do that is scaling the conversations they are having with their customers and creating a totally different experience. You go to a doctor, you have an experience with them, you capture that on a messaging platform and an AI will help you with whatever is wrong with you. You want to process a bill instead of calling and being put on hold, you do that through a conversational experience. 

They want to game change it. The only way they’re going to defend themselves is to get into the conversational space. That’s what they see and we’re the company they’re trusting to scale their operations with the conversational platform.

Conversational Space Is Going To Be As Big As Search and Social

The conversational space is going to be as big as search and social. I think you’ll see one day that there will be a trillion dollar company in this space and I want it to be us. The things we’re investing in right now and setting up for will allow us to do that. That’s what’s important. The Amazon’s and the Facebook’s and Apple’s, they’re in the space. Jeff Bezos made a big bet obviously in Alexa to say this is the way it’s going to be. 

It can’t just be Amazon and Alexa. It has to be other companies getting access to that technology and that’s what we are providing. Who else is providing it? We’re one of the largest companies in the world to do this. Even though we’re not big tech, we are large enough to go ahead and go after them. We are large enough to go ahead and define a space and win it.

Rob Locascio, CEO of LivePerson, predicts that the AI-driven conversational space will ultimately have as much impact and be as big an industry as ecommerce, search, or social. Locascio was interviewed by Jim Cramer on CNBC:

Ecommerce, Search, Social… and Conversational Space?

When I look at the conversational space I think it’s going to have as much impact as ecommerce or search or social. The ability to talk to a machine and have a natural conversation, it’s in the collective consciousness of people. We all believe the Alexa type situation should happen with every company. 

We do that with Delta and T-Mobile and all these big brands. What we’re looking at now is how do we take that to the world? LiveIntent is proprietary technology to look at the intent that a consumer is having with the brand. In terms of I want to buy something, we have a way to analyze that and then use machine learning algorithms to then scale those conversations. That’s what this is about. 

Healthcare Companies Defending Themselves From Amazon Via AI

In Q4 we signed a couple healthcare companies. They want to talk about defending themselves from Amazon because Amazon said they want to go into healthcare. The way they think they can do that is scaling the conversations they are having with their customers and creating a totally different experience. You go to a doctor, you have an experience with them, you capture that on a messaging platform and an AI will help you with whatever is wrong with you. You want to process a bill instead of calling and being put on hold, you do that through a conversational experience. 

They want to game change it. The only way they’re going to defend themselves is to get into the conversational space. That’s what they see and we’re the company they’re trusting to scale their operations with the conversational platform.

Conversational Space Is Going To Be As Big As Search and Social

The conversational space is going to be as big as search and social. I think you’ll see one day that there will be a trillion dollar company in this space and I want it to be us. The things we’re investing in right now and setting up for will allow us to do that. That’s what’s important. The Amazon’s and the Facebook’s and Apple’s, they’re in the space. Jeff Bezos made a big bet obviously in Alexa to say this is the way it’s going to be. 

It can’t just be Amazon and Alexa. It has to be other companies getting access to that technology and that’s what we are providing. Who else is providing it? We’re one of the largest companies in the world to do this. Even though we’re not big tech, we are large enough to go ahead and go after them. We are large enough to go ahead and define a space and win it.

Shantanu Narayen, Chairman and CEO of Adobe, discusses how the pandemic has created another “inflection point” in the move toward digital transformation:

Digital Transformation Is A $120 Billion Opportunity

It was a good quarter all around. All of our businesses performed exceedingly well. On the Creative Cloud and the Document Cloud, not only did we have a great acquisition. in other words, new customers adopting the platform, but we really focused on engagement and demonstrating the value of our products to our customers. Even our retention levels came back to pre-COVID levels which we believe is a really good sign.

What’s happening in the world is the businesses that we’re in, namely creativity and enabling people to tell their story, what’s happening with documents and accelerating document productivity, and what’s happening associated with every single enterprise needing to engage with their customers digitally, when you add all of this up we think it’s over a $120 billion of an addressable market opportunity for Adobe.

Pandemic Was Inflection Point For Everything Being Digital

What the pandemic and the current health situation has done is that it has created yet another inflection point for everything being digital. What we will have to continue to monitor is what happens in the spending environment. But as it relates to the overall need for the kinds of solutions that Adobe provides as well as the importance of digital in the marketplace I think that’s going to be sustainable for decades. You’re not going to put the genie back in the bottle as it relates to engaging digitally and creating content digitally.

We believe that we’re in this third phase of what is happening in the enterprise. Traditionally, businesses first focused on automating the back office, and then they focused on automating the front office for knowledge workers. It’s absolutely clear that the biggest imperative that exists in the enterprise today is how do you engage with customers? This is a category that we call Customer Experience Management.

Customer Insight Is Key To Your Digital Transformation

If you’re an enterprise today and you’re thinking about digital transformation, what’s top of that stack in terms of where you have to invest is to make sure that you have insight into what your customers are doing. How are they engaging with you? What’s the profile? How do you deliver the personalized experience?

We really believe that what you’re seeing in the enterprise spend environment is that the companies that are focused on this next generation of delivering customer engagement, the customer experiences, and the insight associated with how to take the most advantage of that data, they’re going to be the secular winners moving forward.

Not only has Salesforce transformed the way they work with Slack but so are the customers of Salesforce. The company sees Slack as a core platform for powering digital transformation.

“Customer 360 and Slack are powering this transformation for companies in every industry in every region of the world,” said Taylor in yesterday’s earnings call. “Slack outperformed our expectations in the first full quarter as a part of the Salesforce family. The number of customers on Slack who spent over $100,000 was up 44% year-over-year. The adoption of Slack Connect was up an astonishing 176% year-over-year. Slack is not just a product, Slack is a network, and it’s just incredible to see that growth.”

The company seemed pleasantly surprised about how transformative Slack is to the operations of large enterprises. As Slack brought on millions of new users during the pandemic they focused on innovation that has made Slack much more than a simple communications platform.

“Slack also continues to innovate at an unbelievable pace,” notes Taylor. “Slack Huddles, which is Slack’s new real-time audio capability, is already used weekly by over 1/3 of Slack users. And Slack Clips, the new asynchronous video capability, are being played nearly 1 million times a week. And this month at Slack Frontiers, which I hope all of you have watched; and if you haven’t, you can watch it online. Stewart and the team are now the next generation of Slack’s platform, and it’s going to truly transform the way companies think about workflows and automation.”

Customer 360 and Slack are powering this transformation for companies in every industry in every region of the world, according to Taylor.

Slack outperformed our expectations in the first full quarter as a part of the Salesforce family. The number of customers on Slack who spent over $100,000 was up 44% year-over-year. Adoption of Slack Connect was up an astonishing 176% year-over-year. Slack is not just a product, Slack is a network, and it’s just incredible to see that growth.

Slack also continues to innovate at an unbelievable pace. Slack Huddles, which is Slack’s new real-time audio capability, is already used weekly by over 1/3 of Slack users. And Slack Clips, the new asynchronous video capability, are being played nearly 1 million times a week. And this month at Slack Frontiers, which I hope all of you have watched; and if you haven’t, you can watch it online. Stewart and the team are now the next generation of Slack’s platform, and it’s going to truly transform the way companies think about workflows and automation.

“That is definitely what I saw firsthand,” said Co-CEO Mark Benioff. “I was like, how could it be that an airline is basically front-ending their entire system with Slack? That’s a shock to me.”

“Slack is the system of engagement for every workflow, every application, every person on your enterprise,” added Taylor. “It’s really an amazing platform vision. And absolutely watch Slack Frontiers. If you haven’t seen it, I think it will blow your mind.”

“Every CEO and every Board I talk to is focused on how they can succeed in this era of flexible work,” says Taylor. “According to Slack’s research, 93% of workers are looking for flexibility when they work, and 76% are looking for flexibility where they work. Companies need to connect their employees, their partners, their customers from anywhere because we all know we’re not going to be in the office 5 days a week.”

“Our offices aren’t going away,” he said. “It’s just that your digital headquarters is going to be more important because it’s truly the infrastructure that connects all of it, and especially in this new normal. And Slack and Customer 360 together are really powering this transformation.”

Zoom has been rapidly improving its product and services, building on the success of its pandemic-fueled gains. Prior to the pandemic, the company’s platform was primarily used in the enterprise, but quickly became a household name, used by workers, schoolchildren, medical professionals, individuals and families around the world.

The company is continuing to build out its platform, as companies continue to grapple with a changed workforce in a post-pandemic reality. Zoom believes Five9 will be a valuable part of that improvement, giving Zoom users even more ways to interact with their customers.

“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” said Eric S. Yuan, Chief Executive Officer and Founder of Zoom. “Zoom is built on a core belief that robust and reliable communications technology enables interactions that build greater empathy and trust, and we believe that holds particularly true for customer engagement. Enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers. We are thrilled to join forces with the Five9 team, and I look forward to welcoming them to the Zoom family.”

The deal is an all-stock transaction, and is expected to close in the first half of 2022, subject to standard regulatory approvals.

Bill McDermott, CEO, and President of ServiceNow says that only one in four digital transformation projects actually deliver positive ROI due to lack of integration:

Most Digital Transformation Projects Don’t Deliver

We have a situation on our hands where digital transformation, cloud computing, and business model innovation, are all converging at once. ServiceNow is the platform, of all the enterprise platforms, that really makes business work. One of the big lessons that business has right now is trillions have been poured into digital transformation yet only one in four projects actually deliver positive ROI. The reason for that is lack of integration.

Our system integrates with all the existing systems as well as all the collaborative tools in the enterprise. From day one, the customer gets it up and running swiftly because it’s in the cloud. They begin to derive value from it because you automate the way the work is done and ultimately, you’re now in a position to serve your customers the way they want to be served. It’s a speed game and ServiceNow is at the top of its game.

Companies Have To Create New Business Models

We’re an example. If you’re going to grow your company you’re going to take advantage of digital transformation. This is the only way out and it’s the only way forward. In the 20th Century companies put in big heavy on-premise systems. The issue is now they can’t, in a frictionless economy, immediately pivot those business models because they haven’t digitally transformed their business.

About 25 percent of the opportunity of businesses out there today over the next three years will come from white space places they are not in today. They have to create new business models. They have to think about new partnerships and new routes to market. Without the baseline of a platform like ServiceNow they’re not going to get there. 

That’s The Whole Point Of Digital Transformation

I am very optimistic that the economies of the world not only are going to recover but actually going to do very well this year because people are going to be investing in digital transformation. We have seen that does not cost jobs. On the contrary, it frees people up to do things like go after new markets, derive new ideas, and so forth, because the AI revolution is also on.

We have built-in machine learning and AI into our platform. So 80 percent of the soul-crushing work people don’t want to do is done by the Now platform. The 20 percent that involves a human immediately gets initiated through a workflow order from the Now platform. 

Business is really simple, and people are more productive and they’re doing things that can lead to growth and opportunity. That’s the whole point of digital transformation. Right now, companies are hunkered down with systems that are absolutely wearing them out. It’s time to make the bold move, pivot to ServiceNow, and let’s get in there and fix the job.

Fastest-Growing Pure-Play SASS Silicon Valley Company

If you look at our actual earnings results, they were stunning and obviously achieved beyond expectations performance across the board. We also followed that through in the guide. We’ll continue to be the fastest-growing pure-play SASS Silicon Valley company. We will continue to have the best margin profile of all of them. Obviously, we’re going to continue to gain market share in industries around the world, in geographies around the world, particularly in Europe and Asia Pacific, and Japan. 

We will also gain market share on personas. Lots of people are getting the memo now that ServiceNow obviously dominated the IT automation market but the same backbone platform has enabled us to change the employee experience, the customer experience. In these tough times with COVID we can write low-code onto our platform in minutes and roll out new applications to hundreds of thousands of people so companies can move super fast.

We keep the guide consistent with the revenue that we generated in 2020. If there’s an upside to that… fantastic. That’s what good companies should do. They should go beyond expectations when they can but we stand by the guide and we’re looking forward to having a great year. 

ServiceNow Was Born In The Cloud

The whole idea of ServiceNow is so different than SAP which was a company that needed to pivot to the cloud in 2010. We did that and that was very successful. ServiceNow was born in the cloud. It’s a very young company with tremendous growth opportunity on the organic front. Having said that, (we would be in interested in an acquisition) if you have a situation where there is a partner out there that has a substantial TAM, that can be highly complementary and synergistic with ServiceNow on the revenue side. 

It also would have to do great things for the customer, because we have a precious platform and we jealously protect the integration power of that platform. A lot of things would have to be right but I can tell you as responsible business people we always look at it. We don’t need it to make our goals but you always have to look at it. We do want to be the defining enterprise software company the 21st century. That’s our plan.

Stewart Butterfield, CEO of Slack, says that both Slack and Salesforce have no intention of making Slack free for enterprises:

Slack Connect Key To Value Unlock Of Salesforce Deal

The simple version of the back story is this is a really unique combination. We believe we can accomplish in the next five years what might have taken us 20 years to do otherwise. That’s the heart of it and it’s a pretty big milestone for us. We’re excited. It wasn’t expected by the outside world but we have a lot of momentum now. We came out of this quarter and we announced our results and Salesforce announced their results. Then we announced the acquisition all at the same time.

A little bit of this got lost but we added 12,000 new paying customers in that quarter. It’s up 140 percent from a year ago. It matches the crazy surge that we saw during the early days of the pandemic. That momentum is coming from product improvements and it’s coming from Slack Connect which allows two organizations to communicate across organizational boundaries. That’s actually going to be key to the value unlock over the next few years. Salesforce is all about CRM. It’s all about customers and Slack Connect is 95 percent customer-vendor relationships.

Engagement Layer: Everyone Will See It Later

This (acquisition) is 100% offense. There are some really unique aspects of this particular combination. We weren’t looking to sell the company. I have a great relationship with Brett Taylor, President, and COO of Salesforce. We’ve known each other for a couple of decades at this point. There’s a way in which we see the world that i think very few people see it today but everyone will see it later. One way to say that is to look at the engagement layer. That’s kind of a weird term but it is the place where the conversations are happening, the places where the decisions are being made, as the perfect place to bring together workflows across organizational boundaries.

Salesforce has a really broad suite. But of course, we have 2,400 apps in the app directory for Slack. We have 700 000 custom integrations that were developed by customers. These are like unique little integrations, some of them very small, just sending notifications into Slack, and some of them are sophisticated workflows that run entire businesses. That’s something that we will see an increasing degree of sophistication in the messaging environment and an increasing degree of work getting done directly where the decisions are made.

No Intention To Make Slack Free

When Brett and I were talking we talked about the opportunity for something that’s one plus one equals seven. If you think back to the 90s and Cisco acquiring small hardware startups and then plugging it into their network of 20,000 salespeople and just selling a lot more of that thing. That’s not it. We will do that as well. We obviously have incredible distribution and incredible reach and incredible relationships across all industries and across all geographies. So we’ll sell more Slack.

Salesforce recently announced their plan to get to $50 billion in revenue and we’ll play an important part in that. We’ll also be an accelerant for the adoption of Salesforce’s core products. There is definitely no intention to make Slack free. What we’ve seen in the last little while is the biggest telco in North America is wall-to-wall on Slack. The operator of the largest integrated health care system in the United States is on Slack. The single largest government contractor in the United States is wall-to-wall on Slack.

We win in media and technology, kind of famously, but we also win in retail and apparel and industries that people don’t imagine seeing us. We have 142,000 customers right now. There’s going to be a lot of overlap with Salesforce but there’s also going to be 100,000 plus of those customers which are SMBs and kind of outside of Salesforce’s purview so far. We think there’s the opportunity to bring them into the fold and to connect them all together with Slack Connect.

Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30, 2020. 

The transaction is anticipated to close in the second quarter of Salesforce’s fiscal year 2022, subject to approval by the Slack stockholders, the receipt of required regulatory approvals and other customary closing conditions.

Slack CEO Stewart Butterfield told the Wall Street Journal that he is joining Salesforce and will continue to run Slack as a unit of Salesforce after the deal’s close.

“Stewart and his team have built one of the most beloved platforms in enterprise software history, with an incredible ecosystem around it,” said Marc Benioff, Chair and CEO, Salesforce. “This is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world. I’m thrilled to welcome Slack to the Salesforce Ohana once the transaction closes.”

“Salesforce started the cloud revolution, and two decades later, we are still tapping into all the possibilities it offers to transform the way we work. The opportunity we see together is massive,” said Stewart Butterfield, Slack CEO and Co-Founder. “As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility. Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”

Slack to Become the New Interface for Salesforce Customer 360

Salesforce:

Salesforce is the #1 CRM that enables companies to sell, service, market and conduct commerce, from anywhere. Slack brings people, data and tools together so teams can collaborate and get work done, from anywhere. Slack Connect extends the benefits of Slack to enable communication and collaboration between a company’s employees and all its external partners, from vendors to customers.

Slack will be deeply integrated into every Salesforce Cloud. As the new interface for Salesforce Customer 360, Slack will transform how people communicate, collaborate and take action on customer information across Salesforce as well as information from all of their other business apps and systems to be more productive, make smarter, faster decisions and create connected customer experiences.

Salesforce is one of the leading customer relationship management (CRM) and enterprise application software companies in the US. According to Business Insider, Futurum Research analyst Dan Newman believes it could be at a big disadvantage versus Microsoft because of its focus on collecting data primarily from its own tools.

In contrast, Microsoft has moved towards openness in recent years, under the leadership of CEO Satya Nadella. In the past, Microsoft was fiercely territorial about its own products and services. Windows and Office were Microsoft’s two cash cows, and the company was focused on keeping customers locked into that ecosystem.

Under Nadella, however, Microsoft has embraced other platforms and operating systems. Their focus has shifted to providing the best products, apps and services on any platform, rather than fiercely protecting their own.

This approach is serving it well in the CRM market, where Microsoft Dynamics 365 competes with Salesforce. Unlike Salesforce, Microsoft’s products integrate with a wide range of tools and services, including those from competitors. Microsoft seems to be taking the approach of being the central hub where that data comes together.

“We have hundreds and hundreds and hundreds of out-of-the-box connectors that allow our customers to connect to the data they already have, wherever it is: Whether it’s sitting in a system 360 mainframe from the 1970s or it’s sitting in the latest-and-greatest SaaS business application,” said James Phillips, President of Microsoft’s Business Applications Group.

Microsoft’s efforts may force Salesforce to adapt in order to stay competitive.

Marc Benioff, CEO of Salesforce, says that without Oracle founder and CEO Larry Ellison there would be no Salesforce:

There Would Be No Salesforce Without Larry Ellison

Larry Ellison is my mentor. He was my first investor at Salesforce. He was my first Board member. There would be no Salesforce without Larry Ellison. I am absolutely indebted to him. I am very grateful to him. We’re very close friends. Larry has a huge vision for the world. He is an incredible executive. You should never sell Larry Ellison short. Everyone in the world knows that. I don’t understand everything that’s going on. But wow, I’m so impressed by seeing them and everyone else make these aggressive moves.

I’m mostly worried about the companies that aren’t making aggressive moves. I’m calling CEOs who are friends of mine, who are in paralysis and who aren’t making moves. I’m saying look you’ve got to get into participation. You’ve got to get out of paralysis and into participation. You have to become relevant. Larry Ellison is the master of relevance. This is a move to make him relevant. This is so important. He’s giving you a master class in relevance.

Participation, Relevance, and Enablement

You have to enable your organization in new ways. We’re having weekly all-hands calls with tens of thousands of employees every single week. We haven’t done that since we were a startup because we have to enable people in new ways. These ideas, participation, relevance, and enablement. This is what we have to be focused on if we’re going to accelerate and go forward. Then we have to deliver the tactical plays and success stories to make it happen.

Some companies are making that happen and some companies are just sitting back and being too passive. You’ve got to look at both of these organizations.

Marc Benioff, CEO of Salesforce, discusses how we are not living in the past or the future, we are living in the present. He says that the present is a new digital world in an all digital world:

This Is About Helping Our Customers Thrive

We are, of course, in an unpredictable time. There’s never been greater uncertainty in the entire world because you have a global pandemic, you have a global economic crisis, you have a racial justice crisis, you have a global leadership crisis, and you have a global environmental crisis, and they are all happening simultaneously. There’s a lot of uncertainty in the world. That’s why we all really have to focus and get really clear on what we want right now and how we are going to succeed through these times.

This is a time that you can no longer do what you were doing six months ago. You have to do something totally new and if you can do something totally new you can have tremendous success. Salesforce is now an example of that success. We delivered a 29 percent growth quarter. It was amazing. That followed a 30 percent growth quarter. We also had record margins and we had record large deals. It was amazing how many very large transactions we were able to close during that time.

Ultimately, this is about helping our customers succeed and helping them thrive during this time. It was a 63 percent increase in seven-figure deals for our quarter. It is really because the largest most important companies in this world are all making dramatic changes and we’re there to help them connect with their customers in a whole new way.

We Are In A New Digital World… In An All Digital World

We are in a new digital world―in an ALL digital world. The past is gone. It’s not coming back. We are not in the future. We are in the present moment. This is a be here now moment. Everyone needs to realize that the past is gone. We are now in this new digital future and we need to rebuild our companies and organizations. Ultimately, we need to rebuild ourselves to be successful in this new digital future.

I just had a Board meeting last week. I had a Board member and they were talking about how great Zoom is and how we participated in this great IPO and successful it is. The Board members said that Zoom is really the future. I said, look, Zoom is not the future. Zoom is the present. This is our present reality. We are in a new world. This is our reality. We need to all make changes and we need to make them now because this is not going to shift anytime soon. If we’re going to succeed through this we need to realize that the past is gone.

We Can Create The Future That We Want

We are never going back to how it was. All of our employees are at home. Even in countries where we are open like Japan employees don’t want to even come in to the office because they have reskilled themselves. We have a whole reskilling engine called Trailhead.com. They use our tools. We have a tremendous salesforce automation tool that lets our employees sell to our customers remotely digitally. Our Sales Cloud is why we have tremendous sales, productivity, and success. Our Service Cloud is why we are having tremendous ability to service from anywhere and market from anywhere. The reason we’re the fastest growing top five software company in the world is because we use our own products.

This is just a minute in time where I say, wow, I didn’t see this coming. Nobody did. But now that we’re here we have to rebuild ourselves. At the same time we have to also augment for our customers what we can do. We are doing now contact tracing for thousands of companies. We run pandemic response management for 35 states. We didn’t have a pandemic response capability six months ago. Now we have to have it.

We have to be there for our customers to help them be successful whether they are public sector organizations or whether they are the world’s most important companies. This is a moment where if we all decide that we are all going to be successful and that the past is gone, we can create the future that we want.

Robert Herjavec, mega entrepreneur and Shark Tank star, says on CNBC that the coronavirus crisis has caused the word to change forever. Meetings will never be the same and many other post-pandemic changes are in store:

Customer Meetings Will Change Forever

When all of this first happened we wanted to use Zoom because all our customers use Zoom. But I have got to tell you, some of the security issues are really pretty bad within Zoom. So we’ve switched over to Microsoft Teams. I think that’s one of the reasons that Microsoft stock is doing so well. The use of Teams at the corporate enterprise level is really taking off. We’re also seeing Webex usage really go up. There was also the acquisition of BlueJeans (by Verizon), another video conferencing platform.

I have become very optimistic about the return, whenever the return is, and what the world will look like. Some things in the new world will change forever. Customer meetings will change forever. In the past, I never thought that I could do a Zoom call or a Team’s call with the CEO of a company I’m trying to sell to. In the future, I don’t think my customers will want me to come and see them. There’s continued opportunity for remote access. Anything that allows you to connect with clients online or build the brand is going to be really valuable. I had an Instagram Live yesterday with Kris Jenner. She’s been selling online for years now. Every business needs to move online, especially small business.

We’re Into This For The Long Haul

I used to think that we were in a light switch moment where miraculously President Trump will get on the news and say we’re all back on this date. But I think what we’re seeing now in California and in New York is that it’s going to be⎯⎯we’re into this for the long haul. Certain parts of the economy will go back quickly. But even the ones that do go back are going to be limited. 

Restaurants will have to distance half the tables. If I have more space in my restaurant can I charge more along that line? I think it’s going to be challenging but with all those challenges there’s going to be opportunities. The key for me about going back is testing. What that means and how people get tested. There’s a great new saliva test that was approved by the FDA where people can do it at home and I think we just have to be able to do that at scale.

Nobody Wakes Up And Says “I Want My Life To Suck”

Shark Tank is a mirror to what’s happening in the American economy. When we started the show twelve years ago it was during the financial crisis. Nobody could get a loan. So people started a lot of businesses that you didn’t need capital for. Then we moved to online selling. This will be the same thing. If I’ve learned anything on twelve years from Shark Tank it is that the human condition is about hope. Nobody wakes up and says I want my life to suck. Every time somebody comes on Shark Tank they are full of hope and they’re full of optimism. 

This is a challenging time but entrepreneurs will figure it out. The key though is you’ve got to have a growth plan. The stimulus plan, the protection plan, all these relief funds, are simply survival funds. They are not growth funds. If you don’t have a plan to grow, if you don’t have a plan to gain market share, getting a stimulus today is just keeping you in business. It’s not helping you to grow. You’ve got to have a game plan for that.

I want to know what people’s plan is for survival. It makes me want to invest in two types of companies, either a company that has a very strong balance sheet or companies like an Uber or a small business that can scale back its costs. I want to invest in a company that can quickly scale its expenses to meet a decline in revenue or vice versa. So fluidity and the ability to adapt in a small business is really going to be the key. I don’t want to invest in a business with a large infrastructure, buildings, equipment, and all that kind of stuff. That stuff is very difficult to scale down.

Andrew McMillan, a leading customer experience expert, recently discussed customer engagement strategies at the London Business Forum:

Customer Experience is Simple

For me, customer experience is simple. I think the first part is to know who you are as a business and to know what your personality is going to be. Friendly, kind, thoughtful, helpful, or forward thinking? What’s the personality of your brand? Then come up with some attributes and behaviors that are going to enhance that personality. That’s what you then start to try and recruit in terms of your employees.

How You Treat Employees is How Employees Treat Customers

The most important thing, I think I learned from John Lewis, was actually what you do for each other is what you do for customers. Create that working environment for your employees so they find their managers are friendly, thoughtful, and kind to them. I believe then, it’s just a leap of faith but I proved a ton time again, that they will then be friendly, thoughtful, and kind to their customers.

What is Your Companies Vision?

The North Star, some people will call it visions and some people call it purpose. It’s just why do we exist? Why should anybody care about this? Why should anyone want to do any business with us? John Lewis’s was a bit of a strange one actually. The purpose in 1929 was to have an organization where employees were happy.

So these can be really highly aspirational and lofty or they can be very very simple. But having something there, the idea is that people come to work inspired and having a sense of purpose.

6 Ways to Achieve Employee and Customer Engagement

There are six things that you need to think about with employee engagement and customer engagement:

1. The first one is to define what your personality is going to be in terms of behavior and attitude. It can be friendly, kind, thoughtful, whatever you want to be as a business.
2. The second one is to measure that and measure it with employee surveys and customer surveys. This is inside-out. This is what you do for your employees and what you hope they’ll do for customers.
3. The third thing is to communicate it. Communicate it at inception. Then continue to tell stories about people who’ve lived up to those behaviors and attitudes to see what it’s done for customers and what it’s done for them to bring it to life, so people can see what it looks like.
4. The fourth thing is leadership. That’s probably one of the biggest things I see that’s lacking in organizations. There should be leaders modeling the behavior that we talked about and then actually coaching it in their team’s to encourage them to deliver that behavior for each other and for their customers.
5. The fifth thing is HR really. It’s a Reward Recognition Appraisal to make sure those are links to not just the outcomes people achieve but the alignment with the behavior with which they achieve those outcomes. So it’s about how they do things, not just what they do.
6. Finally, the sixth part is the recruitment. If you’ve done the first five really effectively and really built a cohesive network around those first five, you’ve got a great blueprint for exactly the sort of personality and individual you want to recruit into your business.

“The Qualtrics IPO is actually a win-win situation for both SAP and Qualtrics,” says SAP CEO Christian Klein. “When we are talking about Qualtrics let me first outline that Qualtrics was for sure one of the best acquisitions SAP ever did. They performed in the last 9 months above and beyond all the expectations we have set at the point of the acquisition. Now, three months back when I became the sole CEO of SAP Ryan Smith and I discussed a few options about how to move Qualtrics to the next level.”

“SAP’s acquisition of Qualtrics has been a great success and has outperformed our expectations with 2019 cloud growth in excess of 40 percent, demonstrating very strong performance in the current setup,” Klein stated. “As Ryan Smith, Zig Serafin, and I worked together, we decided that an IPO would provide the greatest opportunity for Qualtrics to grow the Experience Management category, serve its customers, explore its own acquisition strategy and continue building the best talent. SAP will remain Qualtrics’ largest and most important go-to-market and research and development (R&D) partner while giving Qualtrics greater independence to broaden its base by partnering and building out the entire experience management ecosystem.”

“When we launched the Experience Management category, our goal was always to help as many organizations as possible leverage the XM Platform as a system of action,” Qualtrics Founder Ryan Smith said. “SAP is an incredible partner with unprecedented global reach, and we couldn’t be more excited about continuing the partnership. This will allow us to continue building out the XM ecosystem across a broad array of partners.”

SAP agreed to acquire Qualtrics just four days before Qualtrics was to go public in 2018, recognizing the potential of bringing together experience and operational data (X+O) to help organizations take action. SAP currently owns 100 percent of Qualtrics shares. SAP will retain majority ownership of Qualtrics and has no intention of spinning off or otherwise divesting its majority ownership interest. Ryan Smith intends to be Qualtrics’ largest individual shareholder.

Christian Klein, CEO of SAP, discusses the reasons for their IPO and says that Qualtrics has been the best acquisition that SAP ever did:

Qualtrics IPO Is A Win-Win For SAP and Qualtrics

When we are talking about Qualtrics let me first outline that Qualtrics was for sure one of the best acquisitions SAP ever did. They performed in the last 9 months above and beyond all the expectations we have set at the point of the acquisition. Now, three months back when I became the sole CEO of SAP Ryan Smith and I discussed a few options about how to move Qualtrics to the next level. The partial IPO, we are both fully convinced, is actually a win-win situation for both SAP and Qualtrics. 

First, it will allow Qualtrics to focus on the non-SAP customer base in a high closed market. Second, despite the IPO, of course, SAP will remain fully committed to Experience Management (XM) and we will develop further use cases for our customers. We will also continue with the joint go-to-market. SAP is fully committed and will be in the long run highly committed to to Qualtrics and also will remain a majority shareholder of Qualtrics going forward.

IPO Allows Qualtrics To Go After non-SAP Customers

We kicked off already in the last 19 months, great use cases for our customers. We launched Human Experience Management (HXM) which helped both to accelerate the sales of Qualtrics but also our core application success factors. We did the same for commerce. In our product strategy, it actually plans to really expand experience management across our solution portfolio. 

Our employees are very excited about that because they see the benefits for our customers and this is something that won’t change with the IPO. This will allow Qualtrics more autonomy to also go after the market with non-SAP customers as this is a high quote segment.

Matthew Biboud-Lubeck, VP of Strategic Services at Amperity, discusses how their platform helps brands create a complete view of their customers in an interview on the B2B Growth podcast:

Helping Brands Create a Single View of Their Customers

We are a CDP (customer data platform) based in Seattle that is helping brands create a single view of their customers and to unlock personalized experiences from that data. If you look back to the founding of Amperity about three years ago our founders were canvassing the marketplace. What you saw was a marketplace using a lot of buzzwords but having a lot of trouble executing them. You heard about personalization, customer 360, and a 360 view of the customer. Marketers across major consumer brands were super frustrated.

They spent a fortune trying to cobble some view of their customer. They invested in technology to help them send better emails, to make their media more targeted, and to unveil better analytics. All of those tools that they have invested in talked about the notion of a single view of the customer because they fundamentally needed that to operate. The reality was that nobody was getting to the solution. We came in to say maybe there is a better way.

Machine Learning Helps Brands Get To Nirvana

There were two things that changed in the marketplace that we capitalized on. First of all, it was that cloud computing got a lot cheaper. It used to be that if you were a big brand and got hundreds of millions of customer interactions, it’s just a lot of data. Part of the reason that no one was able to create an easy solution to putting that all together was because it was cost prohibitive.

The second really interesting evolution in the market is that machine learning has become much more mature. What we found was that everyone in the marketplace was using machine learning to make that last mile to the marketer a little bit better. It was used to decide which products to show a customer or to decide which offer to show a customer or to create a customer care solution that’s automated. You go online and type toward a solution and some bot talks back to you. Nobody was using machine learning to point at the underlying consumer data to help make sense of it and bring it together.

We put together cloud computing that was scalable with better economics alongside a machine learning algorithm that we were pointing at the data to help make sense of it. We realized that what we had was a pretty scalable solution to help brands get to that nirvana of a single view of the customer. That’s how we were born. What’s interesting is that the customer data platform space is a little bit confusing. You have a lot of companies that started as something else that rebranded as a CDP. We were purpose-built from the ground up as a customer data platform designed to bring all of a brands data, reconcile that data to create a notion of identity on it and then to unleash that data back to the brand anywhere that they want to use that data.

>>> Listen to the full B2B Growth podcast here.

Stewart Butterfield, CEO of Slack, discusses via Zoom on CNBC how the pandemic has doubled their pace of growth:

Customers Added Has Nearly Doubled

You think about what people hope to accomplish out of having a meeting. It’s often to get a decision made. It’s to update people on the status of projects. There’s a whole bunch of reasons to have a meeting. There’s an immediate obvious switch that goes off in people’s heads, hey we used to sit in the same room and now we’re at home, we need to have a videoconference. But the best way to support that work in getting the decision made, getting people on the same page, and knowing where you can ask the question is often better served by other methods. In the case of Slack, that’s channels. 

In the first 60th percent of this quarter added 9,000 new paid customers. That’s a net number. This is compared to 5,000 for the previous quarter and 5,000 for the quarter before that. That’s an enormous surge. We’ve also seen the number of messages sent per user up 25 percent. Suddenly people are discovering a lot of techniques that were available to them before that suddenly become mandatory. When the only tools you have to get work done are meetings and email and meetings suddenly become a lot harder to pull off you begin to look for alternatives.

Right Now It Looks Great For Us

We look at what might happen on the small business side (on whether we will see sustained growth). There could be millions of bankruptcies and that will obviously affect us. We have a very healthy small business part of Slack. Enterprises can shut down spending. On the other hand, we’ve seen the surge in sign-ups so obviously people are seeing the need. We also see expansion in existing enterprise customers. It’s very hard to know how those two forces balance each other out. 

There are other things to consider too. I’ve been talking to other software CEOs. What do you do when you’re not doing field marketing events to drive new customers? What do you do when your salespeople can’t travel? What do you do when your executive briefing centers are shut? How is that going to manifest in pipeline and growth in 3, 6, 9, 12 months? Right now it looks great for us but it’s impossible to say how this takes out over the year.